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As RIM sinks to fresh lows, analysts largely keep targets intact

The downward spiral in the share price of Research In Motion Ltd. is continuing today, with the stock down nearly 4 per cent to fresh eight-year lows.

The latest unwelcome news concerning the once almighty BlackBerry maker came Wednesday night, when the company confirmed one of its most promising young executives, Patrick Spence, will be leaving after 14 years. He was in charge of RIM's global sales strategy and has jumped to a different company.

Nasdaq-listed RIM shares hit a low so far today of $10.63 (U.S.) and are now precariously close to sinking below the psychologically important $10 level.

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Interestingly, investors appear to be more pessimistic right now than the analyst community. The mean price target on the Street is $13.55 (U.S.), according to Bloomberg data. That's only slightly less than the mean target of $13.70 on March 29, the date of RIM's last quarterly earnings report. (The next earnings is due out June 15.)

That's not to say the Street is overly bullish on RIM's prospects right now. The majority of analysts -- 32 -- have hold ratings, while 16 of them have sell recommendations. A mere five analysts are recommending investors buy.

If not for the gloomy outlook that RIM's business decline will persist, the stock is looking cheap. It has a trailing 12-month price-to-earnings ratio of 3.51 and 6.15 on a forward 12-month basis.

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RBC Dominion Securities believes trading volumes may stay weak for some time, limiting upside potential in shares of NYSE Euronext Inc. . But the stock should be supported by speculation that its depressed value could ignite takeover interest. "Thus, we view the downside as limited, the upside as possible but unlikely in the near-term, and believe the share price correction is largely complete," said analyst Peter K. Lenardos.

Downside: Mr. Lenardos cut his price target by $1 to $24 (U.S.) and maintained a "sector perform-average risk" rating.

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Orezone Gold Corp. has sold its non-core Sega Gold project in Burkina Faso to Cluff Gold plc for $15-million in cash and 11 million of Cluff shares. While Canaccord Genuity analyst Nicholas Campbell believes the sale was a creative non-dilutive way for Orezone to continue funding its exploration and development activities at its larger nearby Bomboré project, he lowered his valuation of the project due to current market conditions.

Downside: Mr. Campbell cut his price target by $1.50 to $4 and maintained a "speculative buy" rating.

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Canaccord Genuity analyst Scott Chan has lowered his revenue forecasts for the brokerage operations at Laurentian Bank of Canada in light of softer capital markets activity. He still rates the bank as a "buy," however, and believes it will announce a 4 per cent dividend hike as the fiscal second quarter is revealed on June 6.

Upside: Mr. Chan reduced his price target by $1 to $54.50.

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Iamgold Corp.'s growth profile may not be as robust as some of its peers, but its share price significantly undervalues the gold producer's existing assets, argued Dundee Securities Inc. analyst Paul Burchell. The stock is trading at 6.3 times consensus 2013 earnings estimates, compared with the peer group average of 10.4, he noted.

Upside: Mr. Burchell upgraded Iamgold to "buy, high risk" from "neutral."

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CAE Inc. reported fiscal fourth quarter earnings that slightly exceeded Street expectations, as orders and margins in its civil flight simulator business continued to improve at a time when activity in the military segment flattened out. "We continue to recommend investors buy CAE to participant in the company's solid civil rebound potential" and benefits from its recent acquisition of Oxford Aviation Academy, said Canaccord Genuity analyst David Tyerman.

Upside: Mr. Tyerman raised his price target by 50 cents to $15.50 and maintained a "buy" rating.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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